VietNamNet Bridge – The watchdog agency has shown its
determination to reshuffle securities companies by setting up a lot of new
strict regulations on the companies’ operation.
The new Circular No. 165 stipulating
the financial adequacy norms, which will take place from December 1, 2012, is
believed to help the process of restructuring securities companies go more
effectively. A lot of securities companies would have to shut down by the first
quarter of 2013 because they cannot satisfy the new requirements.
The watchdog agency now can
update the information about the “health” of securities companies by
considering not only quarterly, biannual and yearly finance reports, but also
the finance adequacy ratio report as well.
Under the current regulations,
securities companies calculate the finance adequacy ratios themselves by
analyzing the capital usable ratio (which is the ratio of usable capital on the
total risk value) and submit reports to the State Securities Commission (SSC).
The watchdog agency would release
the decision to put the securities companies which cannot satisfy the finance
adequacy norms under the special control.
To date, seven securities
companies have been put under the special control. However, analysts believe
that the modest figure does not truly reflect the actual situation. The list of
the seven companies does not include the unprofitable companies which are on
the verge of bankruptcy, and the ones which always face the liquidity problem.
The problem lies in the fact that
the finance adequacy ratios have been calculated by securities companies
themselves, which means that securities companies can “play tricks” to hide
their troubles.
Especially, some securities
companies successfully avoided the special control by delaying the finance
report submission. The currently valid Circular No. 226 only stipulates the
punishment on the companies unable to satisfy the requirements, while it does
not show how to treat the companies which do not submit reports on schedule.
However, securities companies
will not be able to avoid the special control by delaying the report
submission, once the new circular takes effects.
Analysts have predicted that the
list of the securities companies to be put under the special control would see
new members. At least 40 securities companies, whose reported finance adequacy
ratios have raised doubts from the management agency would see their names in
the list.
Securities companies would die more quickly
The new regulation is also
believed to shorten the securities companies’ duration on the deathbed. Under
the current regulation, a securities company would have to declare death if it
cannot improve the situation after six months under the special control.
Meanwhile, with the new regulation, securities companies would have four months
only to improve the situation.
The circular No. 165 stipulates
that the watchdog agency would force securities companies to suspend operation
when the aggressive loss is equal to 50 percent of the chartered capital.
Under the current regulations, it
is not easy to delete a securities company from the list. The Securities Law
stipulates that the license for the establishment and operation of securities
companies is also the business registration certificate.
Therefore, if the watchdog agency
revokes the establishment and operation license, the legal status of securities
companies would not exist anymore. This would cause difficulties to the debt
payment by securities companies.
TBKTVN
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.
No comments:
Post a Comment